Regional Greenhouse Gas Initiative

The Regional Greenhouse Gas Initiative (RGGI) "is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions." It is a "cap and trade" agreement among ten Northeastern and Mid-Atlantic states to "reduce CO2 emissions from the power sector 10% by 2018." The participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.

"RGGI is composed of individual CO2 Budget Trading Programs in each of the ten participating states," according to the program's website. "These ten programs are implemented through state regulations, based on a RGGI Model Rule, and are linked through CO2 allowance reciprocity. Regulated power plants will be able to use a CO2 allowance issued by any of the ten participating states to demonstrate compliance with the state program governing their facility. Taken together, the ten individual state programs will function as a single regional compliance market for carbon emissions."

Critiques
"RGGI currently allows the 225 power plants whose emissions are capped to emit some 188 million tons of carbon a year. Critics are quick to point out that the cap vastly exceeds current polluting levels, undermining the very notion of their being a 'cap' at all," noted John Wihbey in May 2009. For RGGI states to adjust their carbon "caps" to better reflect -- and impact -- power production, they must go through "an extensive legislative process."

"The emission levels in 2008 for RGGI were only 156 million tons of carbon, a roughly 9 percent decline from 2007. ... The reasons for the yawning gap between the cap limit and the real emissions are complex: a political process that set the original cap to accommodate industry concerns; the recession; milder weather; a move toward cleaner natural gas; and increased energy efficiency in the 10 states. It won't be until 2015 that the cap begins being reduced, with the goal of reducing emissions 10 percent by 2018."

"The other questionable result so far for RGGI is the price for a ton of carbon. It remains in the $3 range, nowhere near the kind of price that might spur utilities to seek alternatives. The price in RGGI’s first auction was $3.05; it was $3.51 in the third auction in March 2009." According to Harvard University environmental economics professor Robert Stavins, "The [RGGI carbon] price is equal to the market's judgment of the expected value of RGGI allowances as options to be exchanged in the future for a federal cap-and-trade system in 2012-2015, when RGGI program is inevitably pre-empted." In other words, the only reason why power companies see value in RGGI's carbon credits is because they believe the federal government will establish a cap-and-trade system.

NJ pulls out of Initiative
In April 2011, New Jersey Governor Chris Christie said he was re-evaluating the state's participation in RGGI and could opt to withdraw the state. The anticipated policy reversal is in step with recent actions in Maine and New Hampshire, where Republican-dominated legislatures are trying to repeal their states' participation in the RGGI.

Some point out the governor's re-evaluation of RGGI may in part be a response to mounting pressure from outspoken RGGI opposition groups, namely Americans for Prosperity (AFP), founded by David Koch in 2004, and the American Legislative Executive Council (ALEC), which is funded partly by the Charles G. Koch Charitable Foundation. In February 2011, AFP launched a media blitz of radio spots and television advertisements in New Jersey to alert residents "to the fact that RGGI will cause their electricity rates to soar and cost our state jobs," according to the announcement.

In May 2011, NJ Governor Christie pulled the state from RGGI, saying it was a "failure," Christie said he would withdraw from the program “in an orderly fashion” by the end of 2011, coinciding with the end of RGGI’s first compliance period. The nine remaining states will need to provide guidance to explain how they will deal with power plants that currently hold carbon allowances from New Jersey.

Personnel
As of May 2009:
 * Jonathan E. Schrag - Executive Director
 * Laura Thomas - Business Director
 * Nicole Singh - Auction Program Manager
 * Emilee Pierce - Communications Manager

Contact information
Regional Greenhouse Gas Initiative, Inc. 90 Church Street, 4th Floor New York, NY 10007

Telephone: (212) 417-3179 Fax: (212) 417-4034 Website: http://www.rggi.org

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